Investors Find a Lot to Like in Tech, Even as a Market Bottom Remains Elusive

Even as the Federal Reserve jacks up interest rates and sends technology stocks tumbling, it only gets harder to stay away from the sector.

On the one hand, there’s so much to like: The Nasdaq 100 Index is now 35% cheaper than at its 2020 peak, megacap companies like Apple Inc. are still filling their coffers with cash and the earnings outlook shows no sign of a significant slowdown.

The index fell 0.8% on Thursday and is down almost 30% so far this year.

But, the Fed. The market chatter going into Wednesday’s monetary policy meeting was that there was a high likelihood of a relief rally in tech if the central bank, as expected, raised its benchmark rate by 75 basis points. Turns out it wasn’t that straightforward. The Nasdaq 100 slumped to early July lows, pretty much erasing most of the summer rally, after a more hawkish tone than hoped for from the Fed.

So why not avoid tech until the dust settles? That just isn’t an option for most institutional investors, given that the industry is by far the largest in the S&P 500 Index, at almost 27% of the benchmark. If tech stocks turn around and you miss out on the rally, it can be career-ending.

Stockpickers thus are gravitating towards “quality” companies with durable businesses or stock charts. Apple Inc. is down just 13% this year. T-Mobile US Inc., cybersecurity company Palo Alto Networks Inc. and chipmaker Texas Instrument Inc. are a few of the others that also have managed to beat most of their tech peers.